European Infrastructure Funds Raise Record Capital

Private infrastructure funds focused on the European market
raised a record amount of capital last year, benefiting in part
from government incentives.

The funds raised 25 billion ($27.8 billion) last year,
surpassing the record raised in 2015 by 50 percent, according
to a Preqin report Thursday. The financial data
provider said funds this year have secured 6.5 billion,
including the 4 billion EQT Infrastructure III, which
closed in February.

With government incentives arising from the European
Commission driving activity and growth in the infrastructure
sector, the region has seen record levels of capital secured in
recent years by increasingly large unlisted infrastructure
funds, Preqin said in the report.

European infrastructure has a massive funding need after
governments reigned in spending during the global financial
crisis in 2008, with European Investment Bank estimating that as much as $2 trillion is
needed by 2020.

This investment is vital if Europes economy is
to continue to recover and be set on a path of sustained
growth, according to an Invest Europe report on
infrastructure investment in November. Invest Europe
didnt respond to an email seeking comment.

In 2015, the European Commission amended Solvency II, its insurance
regulation, to incentivize insurers to invest in
infrastructure. The commission cut back on capital charges for
investments in qualifying infrastructure investments, making it
more worthwhile for investors to raise capital for
infrastructure funds.

Fund managers including Macquarie Infrastructure and Real
Assets, EQT Funds Management and Antin Infrastructure Partners
have raised the largest piles of capital in the past 10 years
for unlisted infrastructure funds, according to Preqin. The
firm didnt return a phone call seeking comment about its
European infrastructure research.

The U.S. also has tremendous need for infrastructure
investment. The American Society of Civil Engineers gave the
United States a D+ for its
infrastructure in 2017, meaning significant upgrades are
required.

Globally, North America has raised the most capital this
year for infrastructure funds. The region represents 60 percent
of capital pooled in 2017, according to Preqin, which says the
fundraising has been driven by the $15.8 billion closing of
Global Infrastructure Partners III.